Saturday, April 24, 2010

MBA Gender Pay Gap -- Delusions of Progress

My colleague in Finance, Professor Ben S. Branch, brought to our attention an article, Women in Management: Delusions of Progress, in the Harvard Business Review (HBR), in its March 2010 edition.

The article was written by Nancy M. Carter and Christine Silva, who found that women make, on the average, $4,600 less than men in their first post MBA jobs. The study conducted by them controlled for job level and industry. Men's salaries not only begin at a higher level, but then rise more quickly, with the consequence that the salary gap widens over time (and the researchers factored out such issues as having children or different goals/aspirations). The research tracked over 4,000 MBAs who graduated between 1996 and 2007.

Carter and Silva work for the firm Catalyst. They write in their HBR article: New research by our firm, Catalyst, shows that among graduates of elite MBA programs around the world—the high potentials on whom companies are counting to navigate the turbulent global economy over the next decade—women continue to lag men at every single career stage, right from their first professional jobs. Reports of progress in advancement, compensation, and career satisfaction are at best overstated, at worst just plain wrong.

Jim Turley, the Chairman and CEO of Ernst & Young, a sponsor of the research study, is quoted as saying “Frankly, the fact that the pipeline is not as healthy as we’d thought is both surprising and disappointing.” “Companies have been working on this, and I thought we’d seen progress. The last decade was supposed to be the ‘promised one,’ and it turns out that it wasn’t. This is a wake-up call for corporations.”

Companies (at least we had thought this) were, supposedly, engaged in efforts to enhance opportunities for women, but inequity remains entrenched.

Carter and Silva conclude that: companies must acknowledge their failure on this front, learn why they haven’t succeeded, and come up with better programs to help talented women advance. Interestingly, they also noted, in their study, that women tend to suffer from "bad, first bosses," who did not mentor them or support them.

Read their provocative and timely HBR article.

I thank my colleague, Professor Ben Branch, for bringing our attention to it. We need to act at all levels to reduce and to eliminate economic and financial disparities and to make sure that there is a level playing field for everyone. Listen up folks, the solution is not to have a world of just males.